Current Affairs

A Magazine of Politics and Culture

Is There Anyone Worse Than a For-Profit Hospital Operator?

Hospital workers acting as predatory debt collectors is the inevitable result of mixing profit and healthcare.

There are some things more morally reprehensible than lying to and stealing from sick poor people. But the list isn’t very long. Taking advantage of desperate ill people and extracting their every last dime in order to enrich yourself is pretty high on the list of things that should rightly send you to Hell.

The New York Times recently had a jaw-dropping investigative report on how certain “nonprofit” hospitals have stolen from their patients, deliberately misleading people who were eligible for free care into thinking they had to pay for it, and having private debt collectors hound people relentlessly over their medical bills. The report focused on the hospital chain Providence, which was ruthless in extracting money from patients, to the point where it actually misled people into thinking they owed money when they were in fact eligible for free care under state law. The stories the Times compiles are devastating: 

“Harriet Haffner-Ratliffe, 20, gave birth to twins at a Providence hospital in Olympia, Wash., in 2017. She was eligible under state law for charity care. Providence did not inform her. Instead it billed her almost $2,300. The hospital put her on a roughly $100-a-month payment plan. It was more than Ms. Haffner-Ratliffe, who was unemployed, could afford. She had to ration gas for her car. One day, her boyfriend walked into their apartment and found her surrounded by bills, crying. When she fell behind on the payments, Providence dispatched a debt collector to pursue her.”

Providence hired the consulting firm McKinsey & Co (who else?) and assigned them to figure out how to maximize the money collected from patients. McKinsey introduced a program called “Rev-Up” (rev for revenue) and soon administrators were crouching at patients’ bedsides asking them to “empty their wallets.” McKinsey quoted Martin Luther King, Jr.’s line, “If it falls your lot to be a street sweeper, sweep streets like Michelangelo painted pictures.” In this case, though, McKinsey helped the hospital chain siphon money from sick people like Michelangelo painted pictures. The corporate culture soon became grotesque: 

“On Halloween at one of Providence’s hospitals, an employee dressed up as a wrestler named Rev-Up Ricky, according to the Washington lawsuit. Another costume featured a giant cardboard dollar sign with “How” printed on top of it, referring to the way the staff was supposed to ask patients how, not whether, they would pay.”

The seeming paradox of the story is that Providence is ostensibly a nonprofit hospital chain, yet it was as pathologically focused on revenue-maximization as any for-profit corporation. The story contains such curious sentences as: “Many nonprofit hospitals were ill equipped for a flood of critically sick Covid-19 patients because they had been operating with skeleton staffs in an effort to cut costs and boost profits.” (emphasis mine) But the CEO of Providence, who earns $10 million a year, is quoted by the Times saying, “nonprofit health care” is a “misnomer” and it should more accurately be called “tax-exempt healthcare.” Indeed, the company’s formal nonprofit status allows it to save billions of dollars in tax revenue, meaning that even as the company fleeces the poor (illegally) and funnels money to the wealthy (including $45 million to McKinsey in a single year), it is effectively being subsidized by the public.

A separate Times investigation of a different hospital chain revealed yet more skulduggery. That one, ​​Bon Secours Mercy Health in Richmond, Virginia, was accused of extorting poor Black patients while making enormous profits. A “hollowed-out” hospital in a Black part of town had “the highest profit margins of any hospital in Virginia, … generating as much as $100 million a year,” in part because the hospital took advantage of “a federal program that allows clinics in impoverished neighborhoods to buy prescription drugs at steep discounts, charge insurers full price and pocket the difference.” The Times documents how a hospital that had been founded by Black doctors in 1907 to serve the community eventually became a cash-cow that offered bare-bones services but made immense amounts of money for its owners.

Both stories are shocking. But an important point is made in a subsequent letter to the Times by Bevin Cohen, director of the Center for Nursing Research and Innovation at Mount Sinai. Cohen points out that it would be a mistake to have a “narrow focus on greedy behavior by hospitals” and overlook the fact that “our nation’s health care system is designed to promote this conduct, and sometimes necessitates it.” Cohen points out that “current financial incentives are misaligned with the goal of providing high-quality, cost-effective care to all Americans,” pointing out that when patients fear incurring bills, “or do not take their medication because their debt burden makes it unaffordable,” they end up “back in the hospital with serious and sometimes life-altering conditions that could have been prevented.” And while there are shameful examples of hospitals like Providence that hire consultants to maximize revenue, it’s also the case that many far less “evil” hospitals still leave patients in huge amounts of debt.  Providence in particular says it is now complying with the law and regrets its previous actions. But that doesn’t mean its patients aren’t going to go broke from medical bills in the future, and while it’s important that the Times is exposing particular hospitals that put “profits over people,” what we ultimately have to remember is that our entire financing system for medical care has been hijacked by the same greed that underlies any industry subject to the profit motive. We also know what would go a good way toward fixing this abominable system: universal, free-at-point-of-use single-payer healthcare.Medicare for All, which enjoys popularity among Americans across the political spectrum, would eliminate medical debt and would give the government the power to keep industry profits from getting out of hand. These kinds of news stories can be made a thing of the past but until we overhaul health financing to make “medical debt” a nonexistent concept, we will inevitably keep seeing them.

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